Kudlow downplays Mnuchin, Navarro drama ahead of trade talks

President Donald Trump’s top economic adviser on Thursday tamped down reports of escalating tensions between Treasury Secretary Steven Mnuchin and White House trade adviser Peter Navarro, as the two administration officials seek to broker a resolution to an ongoing trade dispute with China during two days of high-level meetings in Washington.

“We have a very strong negotiating team,” Larry Kudlow, director of the National Economic Council, said in an interview with Fox Business. “There’s a lot of misreported, gossipy stuff that didn't go on.”

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Mnuchin and Navarro reportedly clashed two weeks ago during an initial round of talks in Beijing, engaging in a screaming match and cursing at one another on the lawn in front of the Chinese government building where the negotiations were taking place.

The confrontation spiraled after Navarro complained to Mnuchin that he’d been shut out of certain meetings with Chinese officials, according to one person briefed on the trip, POLITICO reported. But a senior administration official claimed the Treasury secretary was just following protocol in meeting one-on-one with his Chinese counterpart as the head of the delegation.

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“I didn’t hear any shouting. I didn’t hear any cursing — at least not in English. And I don’t speak Chinese all that well,” Kudlow said. “I can just say this is a very overrated story, and it ain’t much of a story — just gossip, for heaven’s sake.”

Navarro’s role in negotiations this week with the Chinese trade delegation in Washington remains unclear. Though one administration official said Navarro is being excluded from the talks on Thursday and Friday, a White House spokeswoman later said he would have a role.

Kudlow separately told reporters that Trump planned to meet Thursday with Vice Premier Liu He of China, his nation's top trade negotiator.

"He’s the top dog. He’s going to be bringing the varsity A-Team with him — the ones we met a few weeks ago in Beijing," Kudlow said of Liu on Fox Business. "We also expect that they may well have a proposal for us which would extend the conversation and permit additional negotiation. In other words, I’m kind of positive on this story."

Kudlow also addressed a tweet from the president this weekend in which Trump said he was working with President Xi Jinping of China to get Chinese telecommunications giant ZTE “back into business, fast.”

Weeks earlier, Trump’s Commerce Department leveled a seven-year ban on American companies buying and selling products from the phonemaker after it disobeyed the terms of a $1.19 billion penalty agreement announced last year and violated sanctions on Iran and North Korea.

Senate Democrats swiftly rebuked Trump’s post, with Senate Minority Leader Chuck Schumer (D-N.Y.) and nearly three dozen other lawmakers writing in a letter to the president that “America’s national security must not be used as a bargaining chip in trade negotiations.”

Trump reassured those detractors in a Wednesday tweet. “Nothing has happened with ZTE except as it pertains to the larger trade deal,” he wrote online.

“I guess President Xi has asked us, would we take another look at the remedies — the remedies. I don’t hear yet discussions of waiving it,” Kudlow said. “They’re going to look at the remedies. Some people are feeling that we’re too harsh.”

Speaking on how the ZTE penalty would factor into broader trade negotiations with the Chinese, Kudlow echoed assessments from Commerce Secretary Wilbur Ross, who on Monday declared the ban “an enforcement action separate from trade.”

“This is not a trading issue. We regard it as an enforcement issue,” Kudlow said. “Mr. Ross has said that he’s merely been asked by the president to look at it again.”